Union proposes 15% hike in minimum wage

JAKARTA (JP): The Federation of All Indonesian Workers Union proposed yesterday that the government raise the minimum regional daily wage by 15 percent next year.

Union chief Bomer Pasaribu said his proposal is in line with the current Guidelines of State Policy, which state that all workers' minimum physical needs should be fulfilled by the end of the current Sixth Five Year Plan in 1999.

At present, the regional minimum wage meets only 92 percent of workers' minimum physical needs, Bomer told journalists after addressing a seminar on pension schemes here.

He pointed out that past increases in the government-set daily minimum wage had been insufficient compared to the workers' increasing productivity.

Over the past 20 years, the leader argued, Indonesian workers' productivity has increased by 402 percent but in real terms, their pay rises are meaningless.

"It would be natural if workers' have their minimum wage increased because the national productivity level is also rising," Bomer was quoted as saying by the Antara news agency.

According to Bomer, workers' wages represents between 10 percent and 15 percent of companies' total production costs while the "normal" level should be between 30 percent and 40 percent.

The union also proposed that in the future, the minimum wage level is calculated taking into account the workers' dependents as well.

The current daily minimum wage is based on the individual worker's own physical need.

A union leader who declined to be named quipped, that under the current system, Indonesian workers should live in celibacy if they want their wages to be sufficient to make ends meet.

The union, which is the only labor organization the government recognizes, is giving input for the preparation of the upcoming guidelines of state policy to be adopted in 1998.

Adopted after the new president is elected, the state guidelines are renewed every five years.

Bomer said the union will propose that employees of private and state companies should receive their pension after they retire. At present, few private companies give their employees pension when they retire.

As in industrial countries, pension schemes should be made mandatory for private companies, he said.

In Australia, he cited as an example, employers are required to set six percent of their employees' salaries aside for their pension fund. Then the workers are required to pay a certain percent of their wages for the fund.

"I think this system is applicable in Indonesia although the details would have to be carefully studied," he said. "The union will propose that the 1998 guidelines on state policy should make it mandatory for major companies to initiate pension funds." (pan)